Sebi dismisses insider trading charges against Manoj Modi

Mumbai: Market regulator Sebi on Wednesday dismissed allegations of insider trading by Manoj Modi, a close aide of RIL chief Mukesh Ambani, saying charges could not be established after its probe into the six-year-old matter about dealings in shares of erstwhile IPCL.

Sebi also dismissed insider trading charges against Modi’s wife Smita Modi.

 "Considering the facts and circumstances of the case and available records, the alleged violation of… Prevention of Insider Trading Regulations… against Manoj Modi and Smita Modi do not stand established and the matter is, accordingly, disposed of," Sebi said.

The regulator said charges of Manoj Modi being an ‘insider’ as per Sebi’s Prevention of Insider Trading regulations could not be established, and consequently, the allegation against Smita was also not established.

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The order follows a Sebi investigation into trading of shares of Indian Petrochemicals Corporation Ltd, an erstwhile subsidiary of Reliance Industries Ltd (RIL) that was later merged with the parent company, during the period from February 22, 2007 to March 8, 2007.

Sebi had found that IPCL shares had witnessed an unusual plunge of over 8 percent on March 5, 2007 despite the announcement of an interim dividend, but witnessed a major surge of over 14 percent on March 8-9 that year subsequent to an announcement of amalgamation of IPCL with RIL.

Consequently, Sebi had ordered a probe into alleged violations of insider trading regulations by Manoj Modi and Smita Modi, by way of trading in the company’s shares on the basis of price-sensitive information relating to the dividend and amalgamation matters.

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In its 18-page order, Sebi said today that Manoj Modi admitted to have served as consultant to Mukesh Ambani, then Chairman of IPCL, and as director of Reliance Petroleum during that period, as also having served on the board of another group company, Reliance Retail Ltd.

It was alleged that during the period from February 28, 2007 to March 2, 2007, Manoj and Smita Modi together bought one lakh shares of IPCL for Rs 257.82 lakh prior to announcement of declaration of interim dividend and amalgamation of IPCL with RIL.

It was further alleged that Manoj and Smita Modi did not sell any shares of RIL and received the dividend amounting to Rs six lakh, while pursuant to to merger of IPCL with RIL in October 2007, the two received 20,000 shares of RIL as against 1,00,000 shares of IPCL acquired prior to the dissemination of the price sensitive information.

It was alleged that the two were in possession of unpublished price sensitive information while trading in 1,00,000 shares of IPCL, as Manoj Modi was a ‘connected person’ and therefore an ‘insider’ and Smita was also a connected person and an ‘insider’ being his wife.

Meanwhile in an another order, Sebi today slapped a fine of Rs 10,000 on Dhampure Speciality Sugars for allegedly failing to obtain market regulator’s online complaint redressal system, SCORES, authentication within the stipulated time.

In August last year, Sebi had asked all listed firms to register themselves with its online system for investor complaints by September 14, failing which enforcement action would be initiated against them.

Sebi issued a public notice on October 21, 2012 widely against the company in various newspapers and advised them to obtain SCORES authentication within seven-day from the date of advertisement.

However, it was observed that the company failed to obtain SCORES authentication as advised. Consequently, Sebi initiated an adjudication proceedings against the company. The regulator issued a show cause notice in February, 2013.

In its order Sebi said that there is no disproportionate gain or unfair advantage made by the company. Further, there is no loss caused to any investor and there is no record to prove that the default is repetitive.

Taking into consideration of the mitigating factors such as the company has already obtained SCORES authentication as on date of hearing and there are no investor complaints pending against it Sebi imposed “a monetary penalty of Rs 10,000 on the noticee (Dhampure Speciality Sugars)”.

PTI